INVESTOR PRESENTATION March 2019 PUBLIC Forward-Looking - - PowerPoint PPT Presentation

investor presentation
SMART_READER_LITE
LIVE PREVIEW

INVESTOR PRESENTATION March 2019 PUBLIC Forward-Looking - - PowerPoint PPT Presentation

INVESTOR PRESENTATION March 2019 PUBLIC Forward-Looking Statements This presentation includes forward-looking statements including, but not limited to, statements regarding Coca-Cola eceks (CCI) plans, objectives, expectations and


slide-1
SLIDE 1

PUBLIC

INVESTOR PRESENTATION

March 2019

slide-2
SLIDE 2

PUBLIC

This presentation includes forward-looking statements including, but not limited to, statements regarding Coca-Cola İçecek’s (“CCI”) plans, objectives, expectations and intentions and other statements that are not historical facts. Forward- looking statements can generally be identified by the use of words such as “may,” “will,” “expect,” “intend,” “estimate,” “anticipate,” “plan,” “target,” “believe” or other words of similar meaning. These forward-looking statements reflect the current views and assumptions of management and are inherently subject to significant business, economic and other risks and uncertainties. Although management believes the expectations reflected in the forward-looking statements are reasonable, at this time, you should not place undue reliance on such forward-looking statements. Important factors that could cause actual results to differ materially from CCI’s expectations include, without limitation: changes in CCI’s relationship with The Coca-Cola Company and its exercise of its rights under our bottler's agreements; CCI’s ability to maintain and improve its competitive position in its markets; CCI’s ability to obtain raw materials and packaging materials at reasonable prices; changes in CCI’s relationship with its significant shareholders; the level of demand for its products in its markets; fluctuations in the value of the Turkish Lira or the level of inflation in Turkey; other changes in the political or economic environment in Turkey or CCI’s other markets; adverse weather conditions during the summer months; changes in the level of tourism in Turkey; CCI’s ability to successfully implement its strategy; and other factors. Should any of these risks and uncertainties materialize, or should any of management’s underlying assumptions prove to be incorrect, CCI’s actual results from operations or financial conditions could differ materially from those described herein as anticipated, believed, estimated or expected. Forward-looking statements speak only as of this date and CCI has no obligation to update those statements to reflect changes that may occur after that date.

Forward-Looking Statements

2

slide-3
SLIDE 3

PUBLIC

Overview of CCI FY18 Highlights Strategic Priorities Financial Highlights

Agenda

slide-4
SLIDE 4

PUBLIC

Highlights

✓ Proven track record of expansion & growth ✓ Robust performance across all key markets with solid topline growth ✓ Abundant potential in demographics ✓ Compelling NARTD* growth opportunity in our footprint ✓ Strategy, Execution and People to accelerate quality growth ✓ Disciplined financial management to deliver stakeholder value

4

*Non-alcohol ready-to-drink

Overview of CCI

slide-5
SLIDE 5

PUBLIC

We are the 6th Largest Bottler in the Coca-Cola System, Operating in 10 Countries

  • ~400 mn people
  • 26 production plants with 124 lines (2018)
  • 1.5 bn UC(1) annual production capacity
  • ~920 thousand sales points
  • 1.3 bn UC sales volume
  • $ 2.3 bn revenue & $ 395 mn EBITDA

Figures reflect FY 2018 numbers unless otherwise stated (1) Unit case, 1 UC equals 5,678 liters (2) As of FY2018

49% 26% 10% 8% 7% Turkey Pakistan Kazakhstan Iraq Others

Volume Breakdown (2)

Sparkling Market Position

#1 #2 #1 #2

Overview

KAZAKHSTAN KYRGYZSTAN TAJIKISTAN TURKMENISTAN AZERBAIJAN TURKEY IRAQ JORDAN SYRIA PAKISTAN

5

44% 23% 12% 21% Turkey Pakistan Kazakhstan Others

Revenue Breakdown (2)

36% 64% Turkey International

EBITDA Breakdown (2)

Overview of CCI

slide-6
SLIDE 6

PUBLIC

We have a Successful Track Record of Growth

19%

EBITDA

CAGR 2005-2018 Single country in 2005… Expanding into Central Asia and North Iraq in 2006-2007… JV in Pakistan in 2008... A regional bottler today…

318 mn UC 1,315 mn UC

18%

REVENUE

CAGR 2005-2018

12%

VOLUME

CAGR 2005-2018

9x 4x 10x

South Iraq in 2012… 6 Overview of CCI

slide-7
SLIDE 7

PUBLIC

2018 Highlights

4,1% 20,8% 26,2% 6,3% 26,6% 35,7%

Volume Revenue EBITDA 2017 2018

Accelerating quality growth

10,4% 16,4% 11,8% 17,6%

EBIT Margin EBITDA Margin 2017 2018

642 729 730

2016 2017 2018

Accelerating quality growth Continued margin expansion Another year of solid FCF

Delivering on our guidance with strong financial performance

7

Highest net revenue & EBITDA growth

  • f the past 6 years

Revenue Growth Management & effective hedging Focus on working capital and capex efficiency GROWTH YOY MARGIN % TL MILLION

FY18 Highlights

slide-8
SLIDE 8

PUBLIC

1,4% 3,3% 4,8% 2016 2017 2018

Strong volume delivery in all major countries

8

77 mn UC incremental

volume in 2018

3,2% 4,1% 6,3% 2016 2017 2018

TURKEY INTERNATIONAL CONSOLIDATED

29 mn UC incremental

volume in 2018

47 mn UC incremental

volume in 2018

5,2% 4,9% 7,8% 2016 2017 2018 UNIT CASE VOLUME GROWTH YOY

FY18 Highlights

slide-9
SLIDE 9

PUBLIC

9

FY18 Volume growth

SPARKLING STILLS WATER NRTD TEA

  • 2.2%

6.8%

  • 4.9%

11.6% 7.0% 6.0% 11.5%

  • 1.2%

% in Total Mix (2018)* 71% 7% 14% 9% 59 mn UC incremental Sparkling volume in 2018

TOTAL

0.6% 6.3% 4Q18 2018

UNIT CASE VOLUME GROWTH YOY

* Totals may not foot due to rounding differences

FY18 Highlights

slide-10
SLIDE 10

PUBLIC

Turkey: Quality growth maintained

4,8% 6,1% 6,9% 18,7% 34,4%

Volume Volume (excl. NRTD Tea) Transactions (excl. NRTD Tea) Net Revenue EBITDA*

  • 1,8%

1,7% 5,7% 2016 2017 2018

Accelerating Volume Growth Increasing IC Share

20% 22% 23% 2016 2017 2018

Higher Share of Sugar Free**

5,3% 5,7% 6,8% 2016 2017 2018

…driven by Strong Sparkling momentum Highest volume growth in 7 years…

Above 30% volume growth in ‘Coca-Cola No Sugar’

  • Successful innovations and consumer promotions
  • Higher portfolio availability in growing channels
  • Focus on affordability
  • Accelerated cooler investment

2018 GROWTH YOY

* EBITDA excluding other operating income/expense * *Share of No Sugar & Light in Sparkling

10

YoY % in Sparkling % in Sparkling

FY18 Highlights

slide-11
SLIDE 11

PUBLIC

11

Middle East & Pakistan highlights

7,3% 3,9% Pakistan Iraq Focus on efficiencies & core Sparkling 10th Year of Pakistan Operation

Sales Volume

(mn UC)

93 335

2008 2018

3.6x

Sparkling Market Share*

*Source: Canadean

Double-digit volume growth in Coca-Cola trademark Above- industry growth in Sparkling

Production Capacity (mn UC)

3.6x

112 408

2008 2018

42%

+2 pp in 2018

2018 VOLUME GROWTH YOY

FY18 Highlights

slide-12
SLIDE 12

PUBLIC

12

Central Asia highlights

14,1% 29,7% Kazakhstan Azerbaijan Double-digit volume growth in key markets Accelerating growth and gaining share

Azerbaijan

2nd

  • 9,6%

7,0% 12,7% 2016 2017 2018

Accelerating CA Volume Growth Gaining Market Share in Kazakhstan

49% 49% 51% 2016 2017 2018

Highest-ever sales volume in Kazakhstan Fuse tea reached #1 position in Kazakhstan Above 30% volume growth in Sparkling in Azerbaijan

Source: Nielsen

fastest growing country in TCCC system in 2018

2018 VOLUME GROWTH YOY

YoY

FY18 Highlights

slide-13
SLIDE 13

PUBLIC

Strategic Priorities

slide-14
SLIDE 14

PUBLIC

Customer & Consumer

Being the preferred partner of our customers, offering our consumers a wide choice of products fit for every lifestyle and

  • ccasion

Community

Being a good corporate citizen

People

Great place to work

CREATE VALUE

Vision

Be the Best FMCG Company Across

  • ur Markets

Values

Clear Strategic Framework

Strategic Priorities 14

slide-15
SLIDE 15

PUBLIC

Strategic Priorities to Create Value

Accelerate Growth Win at the Point of Sale Exercise Financial Discipline Win with People

  • Full-beverage portfolio
  • Revenue Growth

Management (RGM)

  • Expand Sparkling & Stills
  • Increase frequency
  • Regional strategies
  • Increase outlet coverage
  • Increase cooler penetration
  • Right Execution Daily
  • E-commerce
  • Future-proof RTM
  • Productivity savings
  • Working capital

improvements

  • Healthy FCF
  • Optimum leverage
  • Effective FX management
  • Integrated Talent Strategy
  • Leadership Development
  • High Performing Team
  • Transformation to

“OnePeople”

ONE C E CCI CI

15 Strategic Priorities

slide-16
SLIDE 16

PUBLIC

CCI Value Share Opportunity

+$4bn

9% CAGR

2018- 2021E

NARTD Value Growth Opportunity

8% 9% 51% 29%

WATER STILLS SPARKLING NARTD

INDUSTRY VALUE GROWTH

Source: Nielsen, Canadean and internal estimates, data as of 2018

TOTAL NARTD INDUSTRY IN CCI COUNTRIES: $13BN (2018)

16 Strategic Priorities

slide-17
SLIDE 17

PUBLIC

More Room to Diversify Product Portfolio

Sparkling 71% Sparkling 85%

Water 14% NRTD Tea 9% Still 7% Other 15%

2006

2018

SHARE OF LOW/NO CALORIE IN SPARKLING VOLUME (2018) CATEGORY BREAKDOWN Increasing Household Penetration Double-digit growth in No Sugar

&

17

27% 16% 8% 6% 7% 6% 4% 3% 2% 2% 1% 0,3%

Strategic Priorities

slide-18
SLIDE 18

PUBLIC

More Room to Grow…

59% 50% 40% 35% 28% 24%

Asia Pacific North America World Average Europe, Middle East and Africa Latin America CCI

Share of Immediate Consumption (IC) Packages in Sparkling

You

  • ung Pop
  • pula

lation in in CCI I countries

~60% ~60%

Teen Recruitment Opportunit ity!

* Based on CCI analysis for Turkey operations

~2x higher

NSR per case

~1.5x

higher Gross Margin vs. FC

18 Strategic Priorities

slide-19
SLIDE 19

PUBLIC

  • Management control & full consolidation rights
  • Reasonable proximity
  • Similar market dynamics
  • ROIC > WACC

Turkey 49% Pakistan 26% Kazakhstan 10% Iraq 8% Others 7% Turkey 81% International 19% 2006

2018

Volume Breakdown Guiding principles for geographical expansion

Prudent Approach to Geographical Expansion

19 Strategic Priorities

slide-20
SLIDE 20

PUBLIC

ONE CCI to Drive Business Excellence to Achieve Vision 2025

Towards Vision 2025 Business Excellence

  • Operating Model Governance
  • Prescriptive Analytics & Insights
  • Business Services Delivery
  • Centers of Expertise (CoEs)

Fix Foundation for Real Value Creation Build New (CCI 3.0) Operating Model

20 Strategic Priorities

slide-21
SLIDE 21

PUBLIC

Financial Highlights

slide-22
SLIDE 22

PUBLIC

22

Managing input costs and FX headwinds

World Sugar Prices (London#5 Average, USD/tonne) Resin Prices (Average, USD/tonne) LME Aluminium Prices (Average, USD/tonne) Hedged Position for 2019*

100%** 66% 58%

*As of February 2019 **For unregulated markets

  • Cash designation in place to manage FX

impact on input costs: Hard currency cash allocation for FX-denominated raw material purchases

  • c.90% of Turkey’s 2019 FX-denominated raw

material purchases is hedged at USD/TRY 3.95

  • Positive impact on COGS and lower FX gains

due to designation of cash

Hedging FX exposure related to raw material...

100 200 300 400 500 2017 2018 500 1000 1500 2000 2017 2018 500 1000 1500 2017 2018

Financial Highlights

slide-23
SLIDE 23

PUBLIC

Disciplined Financial Management

23 23

Accelerating quality growth Net Debt (USD mn) Net Debt / EBITDA Net Interest Coverage

2,1 1,5 1,4 2016 2017 2018

6,6 9,7 9,0

2016 2017 2018 652 555 500 2016 2017 2018 Continued deleveraging FX-Neutral Net Debt/EBITDA: ~1.2x Covenant < 3.25x Covenant > 4x Lower Net Interest Coverage due to cross-currency swap

Financial Highlights

slide-24
SLIDE 24

PUBLIC

USD 75% USD 33% Euro 23% Euro 21% 41%

Local Currency 2% Local Currency 5%

2017 2018

Continued focus on balance sheet FX exposure

24 24

Accelerating quality growth Breakdown of Consolidated Debt

Participating cross-currency swap transaction for USD 150 mn Net investment hedging for USD 281 mn Repayment of USD 100 mn USPP (May 2018) Repayment of USD 500 mn Eurobond (October 2018)

Cross- currency swap & Net Investment Hedging

Maturity Profile

19% 12% 2% 2% 15% 51%

2019 2020 2021 2022 2023 2024

USD 80 mn USPP USD 120 mn USPP USD 500 mn Eurobond

Financial Highlights

slide-25
SLIDE 25

PUBLIC

FCF - Improving Working Capital Efficiency

  • 2%
  • 2%

4%

2017 15 Days Cash Conversion Cycle 2016 26 Days

26 Days 2018 47 Days 62 Days

DSO DSI DPO

*Net Sales Revenue

Net Working Capital/NSR*

7,4% 5,7% 4,5% 2016 2017 2018 FULL YEAR

25

30 Days 2016 47 Days 51 Days 29 Days 2017 43 Days 57 Days

2018 12 Days

Financial Highlights

slide-26
SLIDE 26

PUBLIC

FCF - Prudent Capital Expenditure

26

7,3% 5,9% 8,1%

2016 2017 2018

7.1%

  • n

average

*Net Sales Revenue

CapEx / NSR*

FULL YEAR

  • TL 858 million CapEx in 2018
  • 62% related to International operations
  • 38% related to Turkey Operation

Financial Highlights

slide-27
SLIDE 27

PUBLIC

Solid Free Cash Flow Generation

6% 6% 10%

EBITDA Growth

Prudent CapEx Working Capital Efficiency

27

Free Cash Flow and Yield*

*Free cash flow yield based on year-end Mcap

  • 44

10 46 642 729 730

  • 0,3%

0,1% 0,5% 7,6% 8,2% 9,4%

  • 2%

0% 2% 4% 6% 8% 10%

  • 100

100 200 300 400 500 600 700 800

2013 2014 2015 2016 2017 2018 FCF (TLmn) FCF Yield Financial Highlights

slide-28
SLIDE 28

PUBLIC

Disciplined Capital Allocation

ORGANIC GROWTH INORGANIC GROWTH DELEVERAGING SHAREHOLDER RETURN

CapEx/Sales ~7% - 8% (2018E)

  • Capacity Expansion
  • Cold drink equipment
  • Maintenance

Bolt-on acquisitions Geographical expansion

  • Strategic fit
  • Value creation
  • Reasonable proximity

Optimum debt repayment

  • Solid balance sheet
  • Improving leverage

metrics Sustainable dividend policy

  • Increasing payout ratio
  • Higher dividend yield

Optimum CapEx Allocation Debt Repayment Dividends Selective M&A Strategy

28 Financial Highlights

slide-29
SLIDE 29

PUBLIC

2019 Guidance

29

  • Volume growth:
  • 3%-5% growth on a consolidated basis
  • Flat volume in Turkey
  • 6%-8% growth in international operations
  • Net revenue growth:
  • 16%-18% on a consolidated basis (FX-neutral1)
  • EBITDA Margin:
  • Slight improvement on a consolidated basis
  • Capex/Sales: 7%-8% (on a comparable basis)
  • Net debt/ EBITDA: Lower than 1.5x (on an FX-neutral1 and organic basis)

1 FX-Neutral: Using constant FX rates when converting country P&L’s to TL.

Financial Highlights

slide-30
SLIDE 30

PUBLIC

Appendix

slide-31
SLIDE 31

PUBLIC

(TL million) 4Q18 YoY Change 2018 YoY Change Net Sales 2.001 22,9% 10.623 26,6% Gross Profit 573 10,7% 3.527 27,2% EBIT (17) (140,1%) 1.255 43,6% EBITDA 147 (13,4%) 1.871 35,7% Net Income / (Loss) 148 n.m. 327 37,5% GP Margin 28,6% (320 bps) 33,2% 20 bps EBIT Margin (0,9%) (350 bps) 11,8% 140 bps EBITDA Margin 7,4% (300 bps) 17,6% 120 bps EPS* 0,58 n.m. 1,28 37,5%

31

Summary financials

*EPS in TL per 100 shares

slide-32
SLIDE 32

PUBLIC

Medium-term Outlook

*Comparable ** Organic and FX-neutral

Medium-Term 2018-2020 Volume growth 4% - 6% (CAGR) Net Revenue growth (FX neutral) 10% - 12% (CAGR) EBITDA Margin Slight improvement Capex / Sales 7% - 8%* Net Debt / EBITDA < 1.5x**

32

slide-33
SLIDE 33

PUBLIC

Dividends

Dividend per Share (TL per 100 shares)

  • Record high dividends in 2017
  • A total of TL 280 million in dividends over last 3

years

  • Dividend amount based on:
  • Net distributable income
  • Free cash flow generation
  • CapEx and other funding needs for growth
  • Prevailing macroeconomic conditions

0,12 0,20 0,79

2015 2016 2017

* Based on market capitalization as of 18th May

Dividend Yield: 0.3% Dividend Yield: 0.5% Dividend Yield: 2.1%

33

slide-34
SLIDE 34

PUBLIC

Country data - 2018

34

Population (mn)(1) GDP per cap (PPP) (USD 000) (2) Per capita NARTD consumption (3) CCI's Market Share in Sparkling (4) CCI's Market Position in Sparkling Turkey 82 28,3 58 65% 1 Pakistan 201,0 5,7 27 42% 2 Kazakhstan 18,5 27,5 79 51% 1 Iraq 39,8 16,9 51 43% 2 Azerbaijan 9,9 18 37 74% 1 Jordan 9,9 9,4 45 24% 2 Turkmenistan 5,8 19,5 28 n.a. n.a. Kyrgyzstan 6,4 3,8 37 69% 1 Tajikistan 9,1 3,4 16 n.a. n.a.

Source: (1,2) IMF World Economic Outlook (3) CCI and TCCC estimates (4) Nielsen, Canadean

slide-35
SLIDE 35

PUBLIC

Sustainability

3.2.1 MOVE!

TR, KZ, PK, IQ 150,000 Youth

CCI VOLUNTEERS

880 volunteers, 100,000 beneficiaries

PAANI

24 plans, 750,000 beneficiaries

BIST 50 Sustainability Index

Included in Leading Sustainability Indices

35

slide-36
SLIDE 36

PUBLIC

Thank you!

CCI Investor Relations Tel : +90 216 528 4000 Fax: +90 216 510 7010 CCI-IR@cci.com.tr www.cci.com.tr

Borsa Istanbul: CCOLA.IS - Bloomberg: CCOLA TI - Reuters: CCOLA.IS Eurobond - Irish Stock Exchange: CCOLAT